The Center for Public Integrity

Fallout over the collapse of Solyndra, whose bankruptcy may cost taxpayers $535 million in federal loan guarantees, has called into question the tax status of the foundation of a major investor in the solar company.

Named for George B. Kaiser, a wealthy Oklahoma oilman and generous donor to Barack Obama’s 2008 campaign, the non-profit George Kaiser Family Foundation describes itself as “a charitable organization dedicated to breaking the cycle of poverty.” This week, iWatch News reported that over the past five years the foundation has averaged more than $194 million in income annually, but it has issued grants equaling only about 1.7 percent of its net assets. Gifts to private foundations yield tax deductions for donors.

Sen. Charles Grassley, R-Iowa, raised questions Tuesday about Kaiser’s involvement.

“With Solyndra, the government didn’t just lose out on its investment through the $535 million loan guarantee,” Grassley said in a statement during a Senate Finance Committee hearing. “It also lost out on the tremendous subsidy it provided the George Kaiser Family Foundation through the charitable contribution deduction.”

The foundation did not immediately respond to a request for comment.

Solyndra’s implosion has launched three separate government investigations and raised questions about the government’s rushed handling of the half-billion-dollar loan guarantees.

As it scrambled to save the flagship company of the Obama administration's green energy program, the Energy Department ignored repeated warnings from top Treasury Department officials that it was not following guidelines in refinancing Solyndra's half-billion dollar federal loan, a Congressional hearing Friday revealed.

When the DOE refinanced the government's $535 million loan to the California solar panel manufacturer in February, it agreed to let investors, including a major Obama fundraiser, stand in line before the public to recoup the first $75 million of their investment should the company fail. Solyndra declared bankruptcy six weeks ago.

During a House Energy and Commerce hearing on the refinancing of the loan Friday, Rep. Cliff Stearns, R.-Fla., chairman of the Committee's Oversight and Investigations Subcommittee, asked Treasury Department CFO Gary Burner if he had ever seen another case where taxpayer money was subordinated to that of investors.

"No sir, I have not," said Burner, who has been with the department for 28 years, becoming chief financial officer five years ago.

Internal Treasury Department documents released by the committee also show that officials warned DOE and the White House about the refinancing.

The Office of Management and Budget also raised questions, emails show. In December 2010, as DOE moved to restructure the loan, an OMB official wrote: “There are some questions at the staff level about how DOE is going about the restructuring for Solyndra. At least one involves the legal question of what [the statute] means for their plan to make some of the debt “junior” to the new debt. … I think they have stretched this definition beyond its limits.”

The CEO of Solyndra, a California-based solar energy company that received a controversial $535 million loan guarantee from the Obama administration, has resigned.

In papers filed with a bankruptcy court Wednesday, Solyndra said that Brian Harrison had left his post on Friday, Oct. 7, "as contemplated even before these cases were commenced." Solyndra shut its doors and declared bankruptcy six weeks ago.

Solyndra filed the papers in a Delaware court in response to a motion by the Department of Justice to appoint a trustee to oversee the company's bankruptcy case. The Justice Department filed its motion after Harrison and Solyndra's CFO, W.G. Stover invoked the Fifth Amendment and refused to answer questions from a Congressional committee probing the Solyndra loan during a Sept. 23 hearing. The company is also under investigation by the Justice Department, the Treasury Department and the Department of Energy's Inspector General.

The Obama administration had selected Solyndra as the first to receive a loan under an Energy Department program designed to provide government support to companies that would create jobs while generating energy from cleaner sources, such as solar, wind and nuclear. President Obama personally visited the Solyndra complex, hailing it as a leader in this emerging field.

In August, though, Solyndra abruptly shut its doors, laying off 1,100 workers. Within days, it had declared bankruptcy. The House Energy and Commerce Committee's investigative subcommittee has held two hearings intending to unwind the deal and understand how signs of Solyndra's financial trouble had been overlooked by the Department of Energy.

Another hearing is planned Firday morning, when the committee will explore concerns that DOE refinanced the loan — putting investors in line before taxpayers — without approval from the U.S. Treasury Department. The committee has called Treasury officials to testify.